Answer:
1. Income statement for 2016.
Sales revenue ($1,661,000 + $15,000) $1,676,000
Less Cost of Sales
Purchases ($1,490,000 + $145,000) ($1,635,000)
Gross Profit $41,000
Less Expenses
Office Expense $95,000
Salaries and wages expense $955,000
Utilities Expense $530,000 ($1,580,000)
Net Loss ($1,539,000)
<u>2. Statement of retained earnings for the fiscal year ended August 31, 2015.</u>
Retained Earnings Beginning $410,000
Dividends $10,000
Retained Earnings Closing $400,000
Explanation:
Income statement calculates profit : Profit = Gross Profit (Sales - Cost of Sales) - Expenses. Whilst Statement of retained earnings calculates closing balance in Retained Earnings : Closing Balance = Opening Balance + Profit for the year - Dividends
